Diwali is considered an auspicious occasion to buy a house. This year, though, the high property prices seem to have dampened the festive spirit. "Residential real estate rates have risen in Mumbai and Delhi during the past three quarters, though the price rise is not backed by proportionate demand," says Anuj Puri, chairman and country head, Jones Lang LaSalle (JLL) India. He does not see price reductions for ready-to-occupy projects in the main seven cities any time soon.

Lacklustre buying activity

Little wonder then that home-seekers are dragging their feet. "The space has not yet seen any revival in demand for residential properties," says Gulam Zia, Executive Director, Retail and Hospitality, Research and Advisory Services, Knight Frank India. "This trend is common across the country except Bangalore where the scenario is slightly better. The festive season was supposed to provide a boost, but it has not reflected in the demand so far. However, the season has just started and the situation may change in the coming days."

Falling rates offer little respite

Though home loaninterest rates are heading south, they are not yet at comfortable levels. "Interest rates have to decrease substantially to spur noticeable buying activity. Even if that happens, chances of an all-out increase in demand look slim," says Zia. "The most important criterion in the current scenario is overall affordability, in which the actual unit pricing plays the leading role," adds Puri.

Let objective be the determinant

The scenario may be grim, but holding back your decision may not bear any fruit if you plan to live in the house.

"If your objective is self-use, there is no point postponing the purchase," says Zia. "After all, the prices are not going to come down substantially, by say 25%, in the next six months. It is not worth waiting for a price reduction of just 5-7%." But make sure to bargain hard to land a good deal. Also, tread cautiously if you plan to buy an under-construction property, where the going rates are lower than completed properties.

"Launches are already pegged at marginally lower rates, but completion timelines of many of these properties could be in question due to the liquidity crunch," says Puri.

Even if you are keen on making a decision now, you should consider the areas that are likely to witness growth. "If the purpose is purely investment, it is advisable to look at upcoming residential destinations on the peripheries where price points are lower, provided that the areas are seeing sufficient infrastructure and connectivity augmentation," says Anuj Puri.